Irish households are upbeat about the economy and employment while one in three businesses plan to spend more on investment this year.
This is according to the latest Bank of Ireland Economic Pulse which is conducted by Ipsos MRBI on behalf of Bank of Ireland with 1,000 households and over 2,000 businesses on a range of topics including the economy, their financial situation, spending plans, house price expectations and business activity.
The Bank of Ireland Economic Pulse stood at 91.1 in March 2017. The index, which combines the results of the Consumer and Business Pulses, was down 1.4 on February and 5.0 lower compared to this time last year.
The consumer picture brightened this month as households upgraded their assessment of the economy and also took a more upbeat view of their personal finances. In contrast, the unsettled external environment remained a source of concern for many firms and contributed to a fall in the Business Pulse, though sentiment at the sectoral level was somewhat mixed.
With the unemployment rate down to an eight and a half year low and preliminary estimates from the CSO showing that the economy put in a strong performance last year, households felt a bit more positive about the overall economic and employment picture this month with almost half thinking that unemployment will fall further in the next 12 months.
Households’ assessment of their own financial situation also ticked up in March, as did buying sentiment with 36% considering it a good time to purchase big ticket items such as furniture and electrical goods, up from 33% in February.
The Business Pulse came in at 90.8 in March 2017, down 2.5 on last month. Following solid increases in February, the Industry and Services Pulses fell back this month, whereas sentiment was broadly unchanged among retailers.
It picked up among firms in the construction sector, though given the time of the year, seasonal factors may account for some of this improvement. The March data also show that one in three businesses expects to spend more on investment this year compared to last year, with replacing and maintaining plant and equipment the main area of focus.
Firms in industry are also looking to streamline and extend production capacity, while service firms and retailers are investing in ICT as well as in new premises and equipment.
Many firms are also intending to support staff development initiatives, with almost one in three in the industry (29%) and services (31%) sectors and one in five retail firms (22%) saying they expect to increase their training budgets this year compared to last year.
The Housing Pulse gathered pace in March 2017, rising to 110.2. The details show that three in four survey respondents expect house prices to increase in the next 12 months, with the capital leading the way at 83%.
This compares with 75% in the Rest of Leinster, 72% in Munster and 61% in Connacht/Ulster. Rent expectations were also in firm positive territory in March, with the majority of the view that rents will continue to rise over the coming year. At the regional level, Dublin was again ahead of the pack.
Commenting on the investment findings, Dr. Loretta O’Sullivan said, "A range of factors were mentioned as having an impact on businesses’ investment plans this year. Demand from customers, financial and technical conditions were generally seen as a positive, whereas Brexit and Trump-related uncertainty was a negative for some."
She added, "On the staffing front, it is encouraging to see that firms are paying attention to training and development needs. This will help boost productivity, which is always important and is likely to become even more so in the years to come."
Source: www.businessworld.ie
